One Biggest Reason Why Businesses Fail?

Did you know 66.6% of businesses fail within 10 years? Shocked? Me too. People are so smart, energetic, passionate and experienced but cannot carry their business to next decade. If you are business man and having business from past 10 years, congratulations, you are in lucky 33.33% of successful folks (John Chambers, Cisco CEO). 

If you had studies business, you will definitely know that business has different stages and every stage needs equal effort, attention and expertise to run successfully.

I have done research on this issue personally, talked to business gurus, and observed businesses. I realize one biggest reason of business failure, which is “Market Research”.

Let me explain in depth, why market research is biggest reason to fail.

As I told you, market research is the biggest reason why business fails. I will explain you what is market research and how it has most impact on business failure.

Wikipedia states that “market research, which include social and opinion research, is the systematic gathering and interpretation of information about individuals, organizations, businesses or brands. Using statistical and analytical methods and techniques to gain insight or support decision making. Let me make it simpler, market research is organized efforts to gather information. Information can be about anything which effects business. 

By going through this definition, you will realize that yes it is market research, which effect business success most. Here are the different stages of market research in any business must went on. May be you perfect done one stage research but ignored other one. 

This is the basic element of any business. Why your business is the need of your target market?  What need you are going to fill with your brand? McDonald failed in Bolivia due to lack of marketing research.

Did you really have need analysis for your business? Is there any gap still exist in the market? Or you just thought that this business is looking profitable, let’s start it. No, don’t put yourself blindly on the way you don’t know the end. First do research that is there any gap exist in the market? Any need still unfulfilled? When you have exact data in your pocket, you will be able to take more correct decisions.

You have decided to start new business, that’s good. Even you have chosen industry and particular business type. Fantastic! Now it is time to search and define your target customers. Let me give you an example. You have decided to open a burger point.

You have to finalize your recipe too. How could you final your recipe without knowing what your target customers want? Who are your target customers? Young or old? Everyone has different taste. Each age class and gender desire different taste. It is you who will decide that which segment is served. A deep research will explain you different choices and will allow you to take decisions.

You know your customers, did you know your competitors too? Without knowing your competitors, how could you even survive in the market? If you don’t know who your competitors are, you cannot adjust your quality, price, services and marketing strategies.

Business successfully grows with competitive advantage. A business gains competitive advantage when it knows about market, customers’ needs, and competitors. 

Parallel to customers and competitor research, you also need to scan your business environment. It is equally important for any business to know where it going to operate. What is the market structure in which business operate? Any government regulations apply in your industry?

You need to collect all information regarding import and export duties and regulations. Economic trends also effect business. Market trends change with time to time. If technology involves in your industry, then you must have to consider technological changes and advancement too. In short overall environment research also takes important role in business decisions.

Product stage needs critical attention. In the mid-1989, Coca Cola Company made decision to introduce its new product, New Coke (Hartley 1995, pp. 129-145). Over 200,000 blind tests were conducted and finalized the taste. Everyone liked new taste. Coca Cola Company replaced the old stock with new Coke stock over one night. All stock of old coke was taken back and replaced with new Coke. They believed that their product will get huge success but results was totally opposite. 

People have totally rejected new Coke because they have affiliations with old taste. Where they have made mistake? They haven’t research on customers’ preferences. Here is the lesson. Do not launch any product by your own choice. Always focus customer needs, and preferences. Again with previous example, if you start a burger shop for young generation (target customers), then you need to develop taste which your target market like, not you. 

Same with the price, set the price as per your product quality, quantity, competitors’ price and your target market buying power. Do thorough research within your market to set your price. 

Next stage in product research is packaging. Market research also needed for packaging. What package size your customer prefer? What packing quality do you need to attract your customers? What style, size and shape of packaging already available in the market? Do you believe you can get advantage through packaging? 

How to find best channel to deliver products to customers? Channel research is also important zone in product research. How will you reach your customers? How many ways available to contact your customers? How will your customers buy products? Where can customers get information? Will you have online store? Important thing to note here is that you must have to identify each and every single channel through you can deliver products.

Research done for the sake of improving advertisement efficiency is called advertising research. When you start business you advertise business traditionally. With passage of time, research needed to improve results. You have to have to identify that which advertising method is most relevant and productive? How can you improve these methods to gain more results? Advertising research may take place at different stages. You can test your advertisement before launching campaign to check the effectiveness of particular ad or medium. Research also done after launching a campaign to check the result and impact so that if anything found wrong, may correct at early stage.

Let me share you an example about advertising. One friend of newly hire sales manager at Coca Cola for UAE station, asked him about his new job. He replied that he is facing difficulties in new JOB. Friend asked what happened. 

Sales manager said when I appointed here, I don’t have much information about this station. Even I don’t know language, Arabic. I faced difficulties to communicate with local customers. I tried to use pictures to communicate my message. I drew three pictures. In first one, I show a man laying down with thirst in desert. In second picture, he is drinking Coke. In third picture, I show that he is fresh and energetic. Friend happily shouted; very good, its great idea. What are the results?

Sales manager said yes it was great idea but unfortunately delivered negative message. I forgot that Arabic people read from right to left. This is just an example to show that how best advertisement ideas fail if you don’t research who actually your customers are.

All these researches should be followed time to time so that to get latest results. The more business research, more business will improves. Deep researches open opportunities and minimize the effect of threats. Research has no draw back. Even if you have done research before starting business and your found unfavorable results, you are still in good time. You avoided big lose.

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